What is a Hard Fork in Crypto? – News from free Internet users

When a blockchain forks, a new blockchain is created from an existing blockchain. Think of it like an exit ramp when driving on a freeway: The freeway stays, but a new road takes a different course.

Hard Forks and Bitcoin

Hard forks occur when a group of developers or members of a crypto community are unhappy with certain features of the blockchain. The reasons vary, but some possible causes for a hard fork to take place could be changing block sizes, increasing security measures, adding new features, or even reversing fraudulent transactions.

For a hard fork to take place, there must be disagreement between the community and the miners over the current protocol. As miners help facilitate transactions on the blockchain, they have the power to implement a new protocol. If a large enough group of miners wanted to increase Bitcoin’s block size from 8MB to 32MB, they could cast a vote. This is how the first Bitcoin hard fork, Bitcoin Cash, was created.

Miners who wanted to create a larger block size (which would increase transaction speed and reduce fees) proposed a vote to increase Bitcoin’s block size. The vote was not approved by the majority of current Bitcoin miners, so developers in favor of increasing block sizes proceeded with a hard fork. Thus, Bitcoin Cash was born.

Most hard forks resemble the blockchain from which they originate. Apart from a few modifications, Bitcoin Cash is extremely similar to Bitcoin.

Once created, Bitcoin Cash miners and participants could exchange their bitcoins for an equal value of Bitcoin Cash if they chose to adopt the new cryptocurrency.


Other Hard Fork Examples

Since the inception of Bitcoin Cash, more and more hard forks have sprung up. Even Bitcoin Cash turned into Bitcoin SV.

Other notable hard forks include Ethereum and Ethereum Classic. Due to a hack, developers and community members came up with a hard fork proposal to reimburse those who lost money to the hack and to erase the hack from blockchain history. The new fork is now known as Ethereum. Some have decided to stick with the old, unmodified version, which is now called Ethereum Classic.

Even more recently, another hard fork occurred in one of the world’s most valuable cryptocurrencies by market capitalization, Terra. Its native Luna cryptocurrency and algorithm-backed stablecoin UST took a hit following a widespread decline in crypto markets. The algorithm supporting UST lost $1 and Luna then lost value as well. Both have lost almost all their value.

In an effort to salvage the original ideas and goals of the Terra blockchain, founder Do Kwon proposed a hard fork to give the blockchain a fresh start. Now known as Terra Classic, the new hard fork introduced a handful of changes with the promise of averting another disaster like the one in early May 2022.

It can help to think of hard-fork cryptocurrencies as cousins ​​within the same family. For example, Bitcoin, Bitcoin Cash, and Bitcoin SV all have more similarities than differences. The same goes for Ethereum and Ethereum Classic or Terra and Terra Classic. They all have a resemblance to their old blockchain, but due to particular ideas, a hard fork has been introduced to forge a new cryptocurrency.

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What is a Hard Fork in Crypto? – News from free Internet users

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